3®
SCI strengths and investment considerations
Market leader in the death care industry
Acquisition of Alderwoods is value-enhancing transaction
Competitive advantage due to size, unparalleled network and national brand strategy
Diverse geographic exposure
Stable industry fundamentals
Large backlog of preneed revenues
Strong cash flow
Attractive credit profile
4®
Today SCI is well-positioned for profitable growth
LEVERAGEscale and drive operating discipline
APPROACHbusiness by customer segment
MANAGEfootprint of businesses
Profitable growth
Profitable growth
5®
Approach the business by customer segment
Consumer landscape is changing (from products to experience/value)
Segment our consumers based upon their needs
Tailor our business operating strategies to consumer segments
Drop our one-size-fits-all approach
Focus resources on most profitable segments
Respond better to changing demographic trends
Recently hired a Chief Marketing Officer who will help to further develop segmentation strategies
Funeral Cemetery
Quality/Prestige Premium/Prestige
Customs Conscious Standard
Convenience/Location
Price
Manage footprint
Leverage scale
Customer segmentation
6®
Leverage scale & drive operating discipline
Align pricing strategies with customer segments; centralize and simplify pricing process
Focus pricing on service and cemetery property, our competitive advantages
Implement operating standards
Develop clear yet flexible benchmarks and shared best practices for increased productivity
Focus preneed efforts on right product for right customer
Align incentives with product value to SCI; reward incrementality
Pursue affinity opportunities and more fully utilize our purchasing power
Manage footprint
Leverage scale
Customer segmentation
7®
Manage the footprint
Categorize our current footprint based on customer segmentation model
Target expansion growth differentially focusing on highest return segments
FUNERAL: Target segments that value high quality service/memorialization, our core competency
CEMETERY: Target combos and attractive stand-alones
Prioritize capital spending according to consumer model
Proactive funeral home facility capex to ensure facilities meet consumer expectations
Cemetery maintenance standards based on revenue, life-cycle stage and endowment care trust fund levels
Manage footprint
Leverage scale
Customer segmentation
8®
Alderwoods AcquisitionCompelling transaction
Two largest companies in the North American deathcare industry – approx 14% market share
Fully consistent with SCI’s long-term strategy
Significant cost saving and revenue synergy opportunities
Investment returns meaningfully exceed SCI’s weighted average cost of capital
Accretive to operating cash flow and earnings per share excluding one-time costs
Strong cash flow generation and planned divestitures reduce financial risk
Increased preneed backlog to almost $7 billion enhances long-term revenue stability
Expect to be within desired leveraged ratios by 2008
9®
Alderwoods AcquisitionStrong North American presence
3
32
124
99
44
2
38 306
12
26
20
6
7
20
92
53
27
227
2
44
141
1
26
2649
62
11
18
4
19
9
9
19
13
2
21 10
3
2
4
12
13
3
6
7
19
1
2
3
4
26
1
Funeral Homes
36
Cemeteries
32
10
38
8
11 3
1
2
4
5
4
4
5
9
6
12
33
2
32 5 10
11
3 1 2
3 1
9 1 14
2
5
1
3 5 2
Combination
7
11 3
12 1 3
30
3
4
12 7 1
14 17 2
308
45
4 2
29
10
12
33 3 3
5
7 2
22 1 10
Combined company: more than 2,000 funeral homes and cemeteries in 46 States, 8 Canadian provinces, District of Columbia and Puerto Rico
10®
Alderwoods AcquisitionSignificant synergy opportunities
Original expectations of $60 to $70 million within 18 months
Duplicate systems and infrastructure
Management structure duplication
Senior executive and public company costs
Currently expect cost saving synergies to exceed this original range and to be realized quicker than 18 months
Anticipate additional synergies primarily associated with purchasing power
Anticipate revenue opportunities primarily due to pricing realignment from products to services
11®
Near term expectations
Significant focus on integration of Alderwoods
Build up of net cash balances due to asset sales and cash flows
Continued volume loss associated with the exit from low priced immediate cremation activities in certain markets
Continued strong increases in funeral averages due to strategic pricing initiatives
Favorable impact from operating staffing metrics
Improvements in cemetery sales production and efficiencies in selling cost metrics
13®
Strong financial position
Cash on hand of approx $60 million
Total debt of approx $2.0 billion
Asset sales will expedite deleveraging
FTC mandated and other SCI divestitures are anticipated to generate $200 million of proceeds in the near future, while not impacting EBITDA materially
Expect to sell Mayflower (Alderwoods’ insurance company) for approx $65 million
Comprehensive review of combined properties expected to result in additional divestitures
With debt reduction in 2007 and full effect of anticipated synergies from the Alderwoods transaction, we expect Debt/EBITDA to range between 3.0 and 3.5
14®
Target 2008E
Target Ratios
Operating cash flow less certain capex1/Interest Expense
>1.5x 2.2x
Net Debt2/Operating cash flow less certain capex
5x to 7x 3.6x
Net Debt/Total Net Capital3 40% to 45% 38%
Note: 2008E assumes no share repurchases or debt re-financings
Target Ratios
1 Cash flows from operations (excluding unusual items) less capital expenditures (excluding expenditures to construct new funeral home facilities and other growth capital)
2 Total debt less cash on hand
3 Net debt (as defined above) plus stockholders’ equity
15®
New maturity profile
$56
$300
$250
$342
$195
$140
100
200
300
400
$500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Senior Notes Debentures
Existing Maturity schedule ($ in mm)Existing Maturity schedule ($ in mm)
Pro Forma Maturity schedule ($ in mm)Pro Forma Maturity schedule ($ in mm)
$150
$250 $250$195
$14
$197$250
$300
$200
$560
100
200
300
400
$500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Existing Senior Notes New Term Loan¹ New Private Placement Debentures New Senior Notes
1 Term loan anticipated to be retired with asset sales proceeds and free cash flowNote: Schedules exclude approx. $21mm in convertible debentures maturing through 2013 and approx. $121mm of other debt consisting primarily of capital leases, mortgage notes and unamortized discounts
16®
Upcoming reporting schedule
Expect to provide 2007 guidance/outlook on February 15
Expect to report Q4 and fiscal 2006 results on February 28
Expect to be at high end or exceed our 2006 guidance ranges for EPS and cash flow from operations
EPS of $.30 - $.34 ($.32 - $.36 revised for France distribution)
Cash flow from operations of $290 - $315 million
17®
A bright future ahead
Predominant leader in a stable industry
Significant cash flows, liquidity and financial flexibility
Short-term growth opportunity
Successfully integrating the Alderwoods acquisition
Utilizing more centralization and standardization to take advantage of our scale
Aligning pricing and preneed strategies with customer segments and our competitive advantages
Long-term differential growth opportunity
Tailoring our business approach by customer segment
Footprint expansion in customer segments that we excel
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